**FORM
      10-Q**





**SECURITIES
      AND EXCHANGE COMMISSION**





Washington,
      D.C. 20549





(Mark
      One)


x
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934





For
      the
      quarterly period ended December
      31, 2007





OR





o
                TRANSITION
                    REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THESECURITIES
                    EXCHANGE ACT OF 1934




For
      the
      transition period from _______ to ________





Commission
      file number:   1-10986




MISONIX,
      INC.





(Exact
      name of registrant as specified in its charter)






New
                York
            11-2148932
                .(State
                or other jurisdiction of
            (I.R.S.
                Employerincorporation
                or organization)
            Identification
                No.)





1938
                New Highway, Farmingdale, NY
            11735(Address
                of principal executive offices)
            (Zip
                Code)





(631)
      694-9555


(Registrant’s
      telephone number, including area code)





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section
      13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
      months (or
      for
      such shorter period that the registrant was required to file such reports),
      and
      (2) has been subject
      to such filing requirements for the past 90 days.





Yes
                x
            No
                o





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company.
      See
      the definitions of "large accelerated filer," "accelerated filer" and "smaller
      reporting company" in Rule 12b-2 of the Exchange Act.




Large
                accelerated filer o
            Accelerated
                filer oNon-accelerated
                filer o
              (Do
                not check if a smaller reporting
                company)
            Smaller
                reporting company þ




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange
      Act).





Yes
                o
            No
                x





Indicate
      the number of shares outstanding of each of the issuer’s classes of common
      stock, as of
      the
      latest practical date:




Outstanding
                atClass
                of Common Stock
            February
                8, 2008Common
                Stock, $.01 par value
            7,001,369










**MISONIX,
      INC.**





**INDEX**





Part
                I - FINANCIAL INFORMATION
            PageItem
                1. Financial Statements:Consolidated
                  Balance Sheets as of December 31, 2007 (Unaudited) and June 30,
                  2007
            3Consolidated
                  Statements of Operations Six
                  months ended December 31, 2007 and
                  2006 (Unaudited)
            4Consolidated
                  Statements of Operations Three months ended December 31, 2007 and
                  2006
                  (Unaudited)
            5Consolidated
                  Statement of Stockholders’ Equity Six months ended December 31, 2007
                  (Unaudited)
            6Consolidated
                  Statements of Cash Flows Six months ended December 31, 2007 and
                  2006
                  (Unaudited)
            7Notes
                to Consolidated Financial Statements
            8Item
                2. Management’s Discussion and Analysis of Financial Condition and Results
                of Operations
            17Item
                3. Quantitative and Qualitative Disclosures About Market
                Risk
            23Item
                4. Controls and Procedures
            24Part
                II - OTHER INFORMATIONItem
                1A. Risk Factors
            25Item
                4. Submissions of Matters to a Vote of Security Holders
            25Item
                6. Exhibits
            25Signatures
            26











2





**PART
      I - FINANCIAL INFORMATION**




**Item
      1. Financial Statements** .




**MISONIX,
      INC. and Subsidiaries**


**C** **onsolidated** **Balance Sheets**





**December
                31,**
              **2007**
            
            June
                30,
              2007**Assets**
            
            **unaudited**
            
            Derived
                from audited financial statementsCurrent
                assets:Cash
            
            **$**
            **1,107,390**
            
            $
            2,900,358Accounts
                receivable, less allowance for doubtful accounts of$467,060
                and $313,981, respectively
            
            
            **7,650,073**
            
            
            7,679,466Inventories,
                net
            
            
            **11,989,650**
            
            
            11,903,294Deferred
                income taxes
            
            
            **1,028,988**
            
            
            1,028,988Prepaid
                expenses and other current assets
            
            
            **749,223**
            
            
            1,936,243Total
                current assets
            
            
            **22,525,324**
            
            
            25,448,349Property,
                plant and equipment, net
            
            
            **4,600,467**
            
            
            4,728,367Deferred
                income taxes
            
            
            **2,996,262**
            
            
            2,827,009Goodwill
            
            
            **5,517,451**
            
            
            5,008,549Other
                assets
            
            
            **758,808**
            
            
            733,470Total
                assets
            
            **$**
            **36,398,312**
            
            $
            38,745,744**Liabilities
                and stockholders’ equity**Current
                liabilities:Revolving
                credit facilities and notes payable
            
            **$**
            **2,952,417**
            
            $
            4,326,088Accounts
                payable
            
            
            **4,729,181**
            
            
            4,872,941Accrued
                expenses and other current liabilities
            
            
            **3,516,133**
            
            
            3,957,643Foreign
                income taxes payable
            
            
            **674,983**
            
            
            672,330Current
                portion of deferred gain from sale and leaseback of
                building
            
            
            **151,401**
            
            
            160,000Current
                maturities of capital lease obligations
            
            
            **260,971**
            
            
            294,257Total
                current liabilities
            
            
            **12,285,086**
            
            
            14,283,259Capital
                lease obligations
            
            
            **327,000**
            
            
            177,059Deferred
                lease liability
            
            
            **362,950**
            
            
            380,068Deferred
                income taxes
            
            
            **542,854**
            
            
            300,206Deferred
                gain from sale and leaseback of building
            
            
            **1,362,614**
            
            
            1,438,966Deferred
                income
            
            
            **403,235**
            
            
            494,261Total
                liabilities
            
            
            **15,283,739**
            
            
            17,073,819Commitments
                and contingenciesMinority
                interest
            
            
            **213,801**
            
            
            265,284Stockholders’
                equity:Common
                stock, $.01 par value—shares authorized 10,000,000;7,079,169
                issued and 7,001,369 outstanding
            
            
            **70,792**
            
            
            70,792Additional
                paid-in capital
            
            
            **24,969,681**
            
            
            24,871,444Accumulated
                deficit
            
            
            **(4,085,803**
            **)**
            
            (3,507,788
            )Accumulated
                other comprehensive income
            
            
            **358,526**
            
            
            384,617Treasury
                stock, 77,800 shares
            
            
            **(412,424**
            **)**
            
            (412,424
            )Total
                stockholders’ equity
            
            
            **20,900,772**
            
            
            21,406,641Total
                liabilities and stockholders’ equity
            
            **$**
            **36,398,312**
            
            $
            38,745,744




*See
      Accompanying Notes to Consolidated Financial Statements.*




3


**MISONIX,
      INC.** **and Subsidiaries**


**C** **onsolidated** **Statements of Operations**


**(Unaudited)**




**For
                the six months ended**
              **December
                31****,****2007**
            
            2006Net
                sales
            
            **$**
            **22,132,290**
            
            $
            20,281,964Cost
                of goods sold
            
            
            **12,301,921**
            
            
            11,563,343Gross
                profit
            
            
            **9,830,369**
            
            
            8,718,621Operating
                expenses:Selling
                expenses
            
            
            **3,587,185**
            
            
            3,521,356General
                and administrative expenses
            
            
            **5,126,076**
            
            
            4,707,431Research
                and development expenses
            
            
            **1,645,552**
            
            
            1,648,385Total
                operating expenses
            
            
            **10,358,813**
            
            
            9,877,172Loss
                from operations
            
            
            **(528,444**
            **)**
            
            (1,158,551
            )Other
                income:Interest
                income
            
            
            **24,586**
            
            
            42,114Interest
                expense
            
            
            **(251,180**
            **)**
            
            (226,493
            )Royalty
                income and license fees
            
            
            **332,718**
            
            
            458,475Royalty
                expense
            
            
            **(163,468**
            **)**
            
            (11,351
            )Other
            
            
            **122,124**
            
            
            12,330Total
                other income
            
            
            **64,780**
            
            
            275,075Loss
                before minority interest and income taxes
            
            
            **(463,664**
            **)**
            
            (883,476
            )Minority
                interest in net income of consolidatedsubsidiaries
            
            
            **23,311**
            
            
            25,499Loss
                before income taxes
            
            
            **(486,975**
            **)**
            
            (908,975
            )Income
                tax benefit
            
            
            **(143,531**
            **)**
            
            (390,113
            )Net
                loss
            
            
            **($343,444**
            **)**
            
            ($518,862
            )Net
                loss per share - Basic
            
            
            **($.05**
            **)**
            
            ($.08
            )Net
                loss per share - Diluted
            
            
            **($.05**
            **)**
            
            ($.08
            )Weighted
                average common shares outstanding - Basic
            
            
            **7,001,369**
            
            
            6,903,165Weighted
                average common shares outstanding - Diluted
            
            
            **7,001,369**
            
            
            6,903,165





*See
      Accompanying Notes to Consolidated Financial Statements* .








4


**MISONIX,
      INC.** **and Subsidiaries**


**C** **onsolidated** **Statements of Operations**


**(Unaudited)**




**For
                the three months ended**
              **December
                31****,****2007**
            
            2006Net
                sales
            
            **$**
            **11,600,053**
            
            $
            10,639,086Cost
                of goods sold
            
            
            **6,435,478**
            
            
            5,852,331Gross
                profit
            
            
            **5,164,575**
            
            
            4,786,755Operating
                expenses:Selling
                expenses
            
            
            **1,898,675**
            
            
            1,924,117General
                and administrative expenses
            
            
            **2,620,316**
            
            
            2,303,148Research
                and development expenses
            
            
            **935,315**
            
            
            828,168Total
                operating expenses
            
            
            **5,454,306**
            
            
            5,055,433Loss
                from operations
            
            
            **(289,731**
            **)**
            
            (268,678
            )Other
                income:Interest
                income
            
            
            **6,854**
            
            
            20,304Interest
                expense
            
            
            **(118,871**
            **)**
            
            (159,831
            )Royalty
                income and license fees
            
            
            **146,640**
            
            
            271,773Royalty
                expense
            
            
            **(77,498**
            **)**
            
            (5,504
            )Other
            
            
            **128,816**
            
            
            14,675Total
                other income
            
            
            **85,941**
            
            
            141,417Loss
                before minority interest and income taxes
            
            
            **(203,790**
            **)**
            
            (127,261
            )Minority
                interest in net income (loss) of consolidatedsubsidiaries
            
            
            **13,867**
            
            
            (5,840
            )Loss
                before income taxes
            
            
            **(217,657**
            **)**
            
            (121,421
            )Income
                tax benefit
            
            
            **(100,477**
            **)**
            
            (144,975
            )Net
                (loss) income
            
            
            **($117,180**
            **)**
            
            23,554Net
                loss per share - Basic
            
            
            **($.02**
            **)**
            $
            0.00Net
                loss per share - Diluted
            
            
            **($.02**
            **)**
            $
            0.00Weighted
                average common shares outstanding - Basic
            
            
            **7,001,369**
            
            
            6,905,960Weighted
                average common shares outstanding - Diluted
            
            
            **7,001,369**
            
            
            6,962,811





*See
      Accompanying Notes to Consolidated Financial Statements* .





5




**MISONIX,
      INC.** **and Subsidiaries**


**Consolidated
      Statement of Stockholders’ Equity**


**(Unaudited)**





Six
                months ended December 31, 2007**Common
                Stock, $.01**
              **Par
                Value**
            
            **Treasury
                Stock****Number**
              **of
                shares**
            
            **Amount**
            
            **Number**
              **of
                shares**
            
            **Amount**
            
            **Additional**
              **paid-in**
              **capital**
            
            **Accumulated
                deficit**
            
            **Accumulated
                other comprehensive income**
            
            **Total
                stockholders’ equity**Balance,
                June 30, 2007
            
            
            7,079,169
            
            $
            70,792
            
            
            (77,800
            )
            
            ($412,424
            )
            $
            24,871,444
            
            
            ($3,507,788
            )
            $
            384,617
            
            $
            21,406,641Net
                Loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (343,444
            )
            
            -
            
            
            (343,444
            )Foreign
                    currency translation adjustment
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (26,091
            )
            
            (26,091
            )Comprehensiveloss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (369,535
            )Cumulativetransitionadjustmentfor
                FIN 48
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (234,571
            )
            
            -
            
            
            (234,571
            )Stock-basedcompensation
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            98,237
            
            
            -
            
            
            -
            
            
            98,237**Balance,
                December 31, 2007**
            
            
            **7,079,169**
            
            **$**
            **70,792**
            
            
            **(77,800**
            **)**
            
            **($412,424**
            **)**
            **$**
            **24,969,681**
            
            
            **($4,085,803**
            **)**
            **$**
            **358,526**
            
            **$**
            **20,900,772**










*See
      Accompanying Notes to Consolidated Financial Statements* .





6


**MISONIX,
      INC.** **and Subsidiaries**


**Consolidated
      Statements of Cash Flows**


**(Unaudited)**




**For
                the six months
                ended**
              **December
                31,****2007**
            
            2006**Operating
                activities**Net
                loss
            
            
            **($343,444**
            **)**
            
            ($518,862
            )Adjustments
                to reconcile net loss to net cash provided by (used in)operating
                activities:Depreciation
                and amortization and other non-cash items
            
            
            **757,224**
            
            
            1,002,464Bad
                debt expense
            
            
            **168,798**
            
            
            69,477Deferred
                income tax benefit
            
            
            **(164,327**
            **)**
            
            (521,568
            )Loss
                on disposal of property, plant and equipment
            
            
            **52,408**
            
            
            82,427Minority
                interest in net income of subsidiaries
            
            
            **23,311**
            
            
            25,499Stock-based
                compensation
            
            
            **98,237**
            
            
            100,170Deferred
                income
            
            
            **(91,026**
            **)**
            
            (32,636
            )Deferred
                leasehold costs
            
            
            **(98,232**
            **)**
            
            11,861Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            **(122,351**
            **)**
            
            (1,107,145
            )Inventories
            
            
            **(134,300**
            **)**
            
            34,472Income
                taxes
            
            
            **4,882**
            
            
            36,596Prepaid
                expenses and other current assets
            
            
            **1,146,687**
            
            
            332,230Accounts
                payable and accrued expenses
            
            
            **(615,422**
            **)**
            
            (724,061
            )Foreign
                income taxes payable
            
            
            **-**
            
            
            82,050Other
            
            
            **(17,872**
            **)**
            
            (758,003
            )Net
                cash provided by (used in) operating activities
            
            
            **664,573**
            
            
            (1,885,029
            )**Investing
                activities**Acquisition
                of property, plant and equipment
            
            
            **(303,057**
            **)**
            
            (217,208
            )Investment
                in UKHIFU Limited
            
            
            **(25,414**
            **)**
            
            -Acquisition
                of minority interest
            
            
            **(559,768**
            **)**
            
            -Net
                cash used in investing activities
            
            
            **(888,239**
            **)**
            
            (217,208
            )


**Financing
                activities**Proceeds
                from short-term borrowings
            
            
            **9,517,899**
            
            
            5,070,569Payments
                of short-term borrowings
            
            
            **(10,887,510**
            **)**
            
            (2,238,708
            )Principal
                payments on capital lease obligations
            
            
            **(210,174**
            **)**
            
            (185,412
            )Proceeds
                from exercise of stock options
            
            
            **-**
            
            
            61,400Payments
                of long-term debt
            
            
            **-**
            
            
            (27,626
            )Net
                cash (used in) provided by financing activities
            
            
            **(1,579,785**
            **)**
            
            2,680,223Effect
                of exchange rate changes on cash
            
            
            **10,483**
            
            
            (15,365
            )Net
                (decrease) increase in cash
            
            
            **(1,792,968**
            **)**
            
            562,621Cash
                at beginning of period
            
            
            **2,900,358**
            
            
            675,400Cash
                at end of period
            
            **$**
            **1,107,390**
            
            $
            1,238,021**Supplemental
                disclosure of cash flow information:**Cash
                paid for:Interest
            
            **$**
            **259,510**
            
            $
            211,458Income
                taxes
            
            **$**
            **11,539**
            
            $
            13,900**Supplemental
                disclosure of noncash investing****and
                financing activities:**Capital
                lease additions
            
            **$**
            **330,503**
            
            $
            57,062




*See
      Accompanying Notes to Consolidated Financial Statements* .


7


**MISONIX,
      INC.** **and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


(Information
      with respect to interim periods is unaudited)





1.  Basis
      of Presentation





The
      accompanying unaudited consolidated financial statements have been prepared
      in
      accordance with generally accepted accounting principles for interim financial
      information and with the instructions to Form 10-Q and Article 10 of Regulation
      S-X. Accordingly, they do not include all of the information and footnotes
      required by accounting principles generally accepted in the United States for
      complete financial statements. In the opinion of management, all adjustments
      (consisting of normal recurring accruals) considered necessary for a fair
      presentation have been included. Operating results for the six months ended
      December 31, 2007 are not necessarily indicative of the results that may be
      expected for the year ending June 30, 2008 or any interim period.





The
      balance sheet at June 30, 2007 has been derived from the audited financial
      statements at that date, but does not include all of the information and
      footnotes required by generally accepted accounting principles for complete
      financial statements.





For
      further information, refer to the consolidated financial statements and
      footnotes thereto included in the Company’s Annual Report on Form 10-K for the
      year ended June 30, 2007.





2. Net
      Loss Per Share of Common Stock





In
      accordance with Statement of Financial Accounting Standards (“SFAS”) No. 128,
“Earnings Per Share”, basic net loss per common share (“basic EPS”) is computed
      by dividing net loss by the weighted average number of common shares
      outstanding. Diluted net loss per common share (“diluted EPS”) is computed by
      dividing net loss by the weighted average number of common shares and dilutive
      common share equivalents outstanding. Diluted EPS for periods with a net loss
      is
      the same as basic EPS, as the inclusion of the effect of common stock
      equivalents then outstanding would be anti-dilutive. For this reason, we
      excluded from the calculation of diluted EPS all outstanding options for the
      six
      and three-month periods ended December 31, 2007, and the six-month period ended
      December 31, 2006. For the three months ended December 31, 2006, the dilutive
      effect of in-the-money employee stock options was 56,851 shares.





3.  Comprehensive
      (Loss) Income





Total
      comprehensive (loss) income was ($369,535) and ($210,103) for the six months
      and
      three months ended December 31, 2007 and ($231,822) and $175,102 for the six
      and
      three months ended December 31, 2006, respectively. The components of
      comprehensive (loss) income are net loss and foreign currency translation
      adjustments.





4.  Stock-Based
      Compensation





The
      Company adopted the fair-value recognition provisions of SFAS 123R, “Share-Based
      Payment” (“SFAS No. 123R”) effective July 1, 2005. Compensation cost recognized
      in the six and three-month periods ended December 31, 2007 and 2006 include
      compensation cost for all share-based payments granted prior to, but not yet
      vested as of, July 1, 2005, based on the grant date fair value estimated in
      accordance with the original provisions of SFAS No. 123, and compensation cost
      for all share-based payments granted subsequent to July 1, 2005, based on the
      grant date fair value estimated in accordance with the provisions of SFAS
      123R.





Stock
      options are granted with exercise prices not less than the fair market value
      of
      our common stock at the time of the grant, with an exercise term (as determined
      by the Committee administering the applicable option plan (the “Committee”)) not
      to exceed 10 years. The Committee determines the vesting period for the
      Company’s stock options. Generally, such stock options have vesting periods of
      immediate to four





8


**MISONIX,
      INC.** **and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


(Information
      with respect to interim periods is unaudited)





years.
      Certain option awards provide for accelerated vesting upon meeting specific
      retirement, death or disability criteria, and upon a change in control. During
      the three-month periods ended December 31,
      2007
      and 2006, the Company granted options to purchase 19,000 and 52,400 shares
      of
      the Company’s common stock, respectively, and during the six month-periods ended
      December 31, 2007 and 2006, the Company granted options to purchase 61,850
      and
      52,400 shares of the Company’s common stock, respectively.





Stock-based
      compensation expense for the six month-periods ended December 31, 2007 and
      2006
      was approximately $98,000 and $100,000, respectively. Stock-based compensation
      expense for the three- month periods December 31, 2007 and 2006 was $53,000
      and
      $50,000, respectively. Compensation expense is recognized in the administrative
      expenses line item of the Company’s statements of operations on a straight-line
      basis over the vesting periods. As of December 31, 2007, there was $446,000
      of
      total unrecognized compensation cost related to non-vested share-based
      compensation arrangements to be recognized over a weighted-average period of
      2.5
      years.





Total
      cash received from the exercise of stock options was $0 and $61,400 for the
      six-month periods ended December 31, 2007 and 2006, respectively. SFAS No.
      123R
      requires that cash flows from tax benefits attributable to tax deductions in
      excess of the compensation cost recognized for those options (excess tax
      benefits) be classified as financing cash flows.





We
      estimated the fair value of stock options using the following
      assumptions:





For
                the Six Months
              December
                31,
            For
                the Three Months
              December
                31,2007
            2006
            2007
            2006Risk-free
                interest rate
            4.3%
            4.8%
            4.3%
            4.8%Expected
                option life in years
            6.5
            6.0
            6.5
            6.0Expected
                stock price volatility
            54.7%
            55.2%
            54.9%
            55.2%Expected
                dividend yield
            0%
            0%
            0%
            0%Weighted-average
                fair value of options granted
            $2.51
            $1.97
            $2.90
            $1.97





The
      expected life was based on historical exercises and terminations. The expected
      volatility over the expected life of the options is determined using historical
      volatilities based on historical stock prices. The expected dividend yield
      is 0%
      as the Company has historically not declared dividends and does not expect
      to
      declare any in the future.





9




**MISONIX,
      INC.** **and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


(Information
      with respect to interim periods is unaudited)





Changes
      in outstanding stock options during the six months ended December 31, 2007
      were
      as follows:




OptionsNumber
                ofShares
            
            Weighted
                Average
              ExercisePrice
            
            Weighted
                Average Remaining ContractualLife
                (years)
            
            AggregateIntrinsicValueOutstanding
                as of June 30, 2007
            
            
            1,802,566
            
            $
            5.88
            
            
            5.4Granted
            
            
            61,850
            
            
            4.33Exercised
            
            
            —
            
            
            —Forfeited
            
            
            10,880
            
            
            6.16Expired
            
            
            25,000
            
            
            14.80Outstanding
                as of December 31, 2007
            
            
            1,828,536
            
            $
            5.70
            
            
            5.4
            
            $
            265,839Exercisable
                and vested at December 31, 2007
            
            
            1,641,780
            
            $
            5.78
            
            
            4.8
            
            $
            181,072Available
                for grant at December 31, 2007
            
            
            604,627




5. Income
      Taxes





The
      Company adopted the provisions of Financial Accounting Standards Board ("FASB")
      Interpretation No. 48 (“FIN 48”), an interpretation of SFAS 109, effective July
      1, 2007. In response to the issuance of FIN 48, the Company reviewed its
      uncertain tax positions in accordance with the recognition standards established
      by FIN 48. As a result of this review, the Company has adjusted its estimate
      of
      its uncertain tax positions by recognizing an additional liability (including
      interest) of approximately $235,000 through a charge to accumulated deficit.
      The
      liability is included in deferred income taxes payable. The Company does not
      expect any material changes to the estimated amount of liability associated
      with
      its uncertain tax positions through July 1, 2008.





The
      Company generally recognizes interest and penalties related to uncertain tax
      positions through income tax expense. As of July 1, 2007, the Company had
      accrued approximately $32,000 for the payment of tax-related interest. An
      additional $8,000 was accrued during the six months ended December 31,
      2007.





There
      are
      no federal, state or foreign audits in process as of December 31, 2007. Open
      tax
      years related to federal and state filings are for the years ended June 30,
      2004, 2005 and 2006. The Company files state tax returns in New York and
      Colorado and its tax returns in those states have never been examined. The
      Company’s foreign subsidiaries, Labcaire Systems Ltd., Misonix, Ltd. and UKHIFU
      Limited file tax returns in England. The England Inland Revenue Service has
      not
      examined these tax returns.





In
      June
      2006, the FASB ratified the consensus reached by the Emerging Issues Tax Force
      in Issue No. 06-3 (“EITF 06-3”), “How Taxes Collected from Customers and
      Remitted to Governmental Authorities Should Be Presented in the Income Statement
      (That is, Gross versus Net Presentation).” The scope of EITF 06-3 includes any
      tax assessed by a governmental authority that is directly imposed on a
      revenue-producing activity between a seller and a customer and may include,
      but
      is not limited to, sales, use, value added, and some excise taxes. EITF 06-3
      also concluded that the presentation of taxes within its scope on either a
      gross
      (included in revenues and costs) or net (excluded from revenues) basis is an
      accounting policy decision subject to appropriate disclosure. EITF 06-3 is
      effective for periods beginning after December 15, 2006. The Company currently
      presents these taxes on a net basis and has elected not to change its
      presentation method.




10


**MISONIX,
      INC.** **and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


(Information
      with respect to interim periods is unaudited)





6.  Inventories




Inventories
      are summarized as follows:




**December
                31,**
              **2007**
            
            June
                30,
              2007Raw
                material
            
            **$**
            **6,357,064**
            
            $
            6,593,458Work-in-process
            
            
            **2,639,612**
            
            
            2,624,212Finished
                goods
            
            
            **4,929,214**
            
            
            4,599,040**13,925,890**
            
            
            13,816,710Less
                valuation reserve
            
            
            **1,936,240**
            
            
            1,913,416**$**
            **11,989,650**
            
            $
            11,903,294





7. Accrued
      Expenses and Other Current Liabilities





The
      following summarizes accrued expenses and other current
      liabilities:




**December
                31,**
              **2007**
            
            ****June
                30,
              2007Customer
                deposits and deferred contracts
            
            **$**
            **823,371**
            
            $
            1,084,412Accrued
                payroll and vacation
            
            
            **755,414**
            
            
            567,296Accrued
                VAT on sale of Labcaire building
            
            
            **229,690**
            
            
            631,229Accrued
                VAT and sales tax
            
            
            **409,139**
            
            
            118,176Accrued
                commissions and bonuses
            
            
            **352,701**
            
            
            484,022Accrued
                professional fees
            
            
            **64,610**
            
            
            47,413Litigation
            
            
            **419,000**
            
            
            419,000Other
            
            
            **462,208**
            
            
            606,095**$**
            **3,516,133**
            
            $
            3,957,643





8. Revolving
      Credit Facilities





On
      December 29, 2006, the Company and its subsidiaries, Acoustic Marketing
      Research, Inc. d/b/a Sonora Medical Systems (“Sonora”) and Hearing Innovations,
      Inc. (“Hearing Innovations”) (the Company, Sonora and Hearing Innovations
      collectively referred to as the “Borrowers”) and Wells Fargo Bank entered into a
      (i) Credit and Security Agreement and a (ii) Credit and Security Agreement
      Export-Import Subfacility (collectively referred to as the “Credit Agreements”).
      The aggregate credit limit under the Credit Agreements is $8,000,000 consisting
      of a revolving facility in the amount of up to $8,000,000. Up to $1,000,000
      of
      the revolving facility is available under the Export-Import Agreement as a
      subfacility for Export-Import working capital financing. All credit facilities
      under the Credit Agreements mature on December 29, 2009. Payment of amounts
      outstanding under the Credit Agreements may be accelerated upon the occurrence
      of an Event of Default (as defined in the Credit Agreements). All loans and
      advances under the Credit Agreements are secured by a first priority security
      interest in all of the Borrowers’ accounts receivable, letter-of-credit rights,
      and all other business assets. The Borrowers have the right to terminate or
      reduce the credit facility prior to December 29, 2009 by paying a fee based
      on
      the aggregate credit limit (or reduction, as the case may be) as follows: (i)
      during year one of the Credit Agreements, 3%; (ii) during year two of the Credit
      Agreements, 2%; and (iii) during year three of the Credit Agreements,
      1%.





The
      Credit Agreements contain financial covenants requiring that the Borrowers
      not
      incur or contract to incur Capital Expenditures (as defined in the Credit
      Agreements) of more than $1,000,000 in the




11


**MISONIX,
      INC.** **and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


(Information
      with respect to interim periods is unaudited)





aggregate
      in any fiscal year or more than $1,000,000 in any one transaction. At December
      31, 2007, the Borrowers were in compliance with all financial covenants under
      the Credit Agreements.





The
      available amount under the Credit Agreements is the lesser of $8,000,000 or
      the
      amount calculated under the Borrowing Base (as defined in the Credit
      Agreements). The Borrowers must maintain a minimum outstanding amount of
      $1,250,000 under the Credit Agreements at all times and pay a fee equal to
      the
      interest rate set forth on any such shortfall. Interest on amounts borrowed
      under the Credit Agreements is payable at Wells Fargo’s prime rate of interest
      plus 1% per annum floating, payable monthly in arrears. The default rate of
      interest is 3% higher than the rate otherwise payable. A fee of 1⁄2 % per annum on
      the Unused Amount (as defined in the Credit Agreements) is payable monthly
      in
      arrears. At December 31, 2007, the balance outstanding under the Credit
      Agreement was $1,984,000 and an additional $1,692,000 was available under this
      line of credit.





Labcaire
      Systems, Ltd. (“Labcaire”) has a debt purchase agreement with Lloyds TSB
      Commercial Finance (“Lloyds”). The amount of this facility bears interest at
      Lloyd’s base rate (5.5%) at December 31, 2007 plus 2.0% and fluctuates based on
      the outstanding United Kingdom and European receivables. The agreement expires
      September 28, 2008. The agreement covers all United Kingdom and European sales.
      At December 31, 2007, the balance outstanding under this credit facility was
      $915,000 and Labcaire was in compliance with all financial
      covenants.





9. Commitments
      and Contingencies





A
      jury in
      the District Court of Boulder County, Colorado has returned a verdict against
      Sonora in the amount of $419,000 which was recorded by the Company during the
      fourth quarter of fiscal 2005. The case involved royalties claimed on recoating
      of transesophogeal probes, which is a process performed by Sonora. Approximately
      80% of the judgment was based on the jury’s estimate of royalties for potential
      sales of the product in the future. Sonora has moved for judgment
      notwithstanding the verdict based on, among other things, the award of damages
      for future royalties. Sonora has also moved for a new trial in the
      case.





The
      Company is a defendant in claims and lawsuits arising in the ordinary course
      of
      business. The Company believes that it has meritorious defenses to such claims
      and lawsuits and is vigorously contesting them. Although the outcome of
      litigation cannot be predicted with certainty, the Company believes
      that these actions will not have a material adverse effect on the Company’s
      consolidated financial position or results of operations.





On
      September 6, 2007, but effective as of August 30, 2007, the Company and William
      H. Phillips (“Phillips”) entered into a Settlement Agreement (the “Agreement”).
      Pursuant to the Agreement, the Company and Phillips resolved certain disputes
      between them concerning the purchase price to be paid by the Company for shares
      of the common stock of Sonora owned by Phillips. The Company owned ninety (90%)
      percent of the outstanding shares of Sonora prior to the execution of the
      Agreement.





Pursuant
      to the Agreement, the Company will pay Phillips the aggregate sum of $1,214,780
      (the “Purchase Price”). The Company paid Phillips $296,118 on June 7, 2007,
      $311,272 on August 30, 2007 and $306,220 on November 28, 2007. The Company
      will
      pay the final installment due on March 1, 2008.





The
      shares of Sonora being sold to the Company are being held in escrow and released
      pro-rata with each installment payment of the Purchase Price.





The
      effect of this transaction, upon completion, will be to increase goodwill by
      $969,800, decrease minority interest by $149,737 and record interest expense
      of
      $95,242.





12


**MISONIX,
      INC.** **and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


(Information
      with respect to interim periods is unaudited)




10. Recent
      Accounting Standards





In
      March
      2006, the FASB issued Statement of Financial Accouting Standard ("SFAS No.
      156,") “Accounting for Servicing of Financial Assets” (“SFAS 156”), an amendment
      of SFAS 140, “Accounting for Transfers and Servicing of Financial Assets and
      Extinguishment of Liabilities”. SFAS 156 requires all separately recognized
      servicing assets and servicing liabilities to be initially measured at fair
      value, if practicable, and permits an entity to subsequently measure those
      servicing assets and servicing liabilities at fair value. SFAS 156 is effective
      for fiscal years beginning after September 15, 2006. The Company adopted SFAS
      156 effective July 1, 2007 and the adoption of SFAS 156 did not have a material
      effect on the Company’s consolidated financial position or results of
      operations.





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS
      157”). SFAS 157 provides a new single authoritative definition of fair value and
      provides enhanced guidance for measuring the fair value of assets and
      liabilities and requires additional disclosures related to the extent to which
      companies measure assets and liabilities at fair value, the information used
      to
      measure fair value, and the effect of fair value measurements on earnings.
      This
      Statement is effective as of the beginning of an entity’s first fiscal year
      beginning after November 15, 2007. The Company is currently evaluating the
      impact that the adoption of SFAS 157 may have on the Company’s consolidated
      financial position and results of operations.





In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities” (“SFAS 159”), which provides
      companies with an option to report selected financial assets and liabilities
      at
      fair value in an attempt to reduce both complexity in accounting for financial
      instruments and the volatility in earnings caused by measuring related assets
      and liabilities differently. This Statement is effective as of the beginning
      of
      an entity’s first fiscal year beginning after November 15, 2007. The Company is
      currently evaluating the impact that the adoption of SFAS 159 may have on the
      Company’s consolidated financial position and results of operation.





In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements — an amendment of ARB No. 51” (“SFAS 160”).
      SFAS 160 amends ARB No. 51 to establish accounting and reporting standards
      for
      the noncontrolling interest in a subsidiary and for the deconsolidation of
      a
      subsidiary. It clarifies that a noncontrolling interest in a subsidiary, which
      is sometimes referred to as a minority interest, is an ownership interest in
      the
      consolidated entity that should be reported as equity in the consolidated
      financial statements. Among other requirements, this Statement requires
      consolidated net income to be reported at amounts that include the amounts
      attributable to both the parent and noncontrolling interest. It also requires
      disclosure, on the face of the consolidated statement of operations, of the
      amounts of consolidated net income (loss) attributable to the parent and to
      the
      noncontrolling interest. SFAS 160 is effective for fiscal years, and interim
      periods within those fiscal years, beginning on or after December 15, 2008.
      Earlier adoption is prohibited. We have not yet evaluated the impact of SFAS
      160
      on our consolidated financial position and results of operations.





11. Related
      Party





The
      Company has subcontracted Focus Surgery, Inc. (“Focus”) to perform research and
      development activities for which the Company recorded expenses of $229,200
      and
      $44,000 to Focus during the six months ended December 31, 2007 and 2006,
      respectively, which amounts are recorded as research and development expenses
      in
      the accompanying statements of operations. During fiscal 2004, Focus entered
      into an exclusive agreement with the Company to distribute the Sonablate® 500 in
      the European market. The




13


**MISONIX,
      INC.** **and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


(Information
      with respect to interim periods is unaudited)





Company
      purchased approximately $509,000 and $203,000 of product from Focus during
      the
      six months ended December 31, 2007 and 2006, respectively. Total sales to Focus
      were approximately $216,000 and $289,000 for the six months ended December
      31,
      2007 and 2006, respectively. Accounts receivable due from Focus at December
      31,
      2007 and June 30, 2007 were approximately $84,000 and $4,000, respectively.
      Accounts payable to Focus totaled approximately $832,000 and $508,000 at
      December 31, 2007 and June 30, 2007, respectively.




12. Business
      Segments





The
      Company operates in two business segments which are organized by product types:
      medical devices and laboratory and scientific products. Medical devices include
      the AutoSonixTM ultrasonic cutting and coagulatory system, the Sonablate 500®
(used to treat prostate cancer), refurbishing of high-performance ultrasound
      systems and replacement transducers for the medical diagnostic ultrasound
      industry, ultrasonic lithotriptor, ultrasonic neuroaspirator (used for
      neurosurgery), soft tissue aspirator (used primarily for the cosmetic surgery
      market) and the wound debrider. Laboratory and scientific products include
      the
      Sonicator Ultrasonic liquid processor, Aura ductless fume enclosure and the
      Labcaire ISIS and Guardian endoscope disinfectant systems. The Company evaluates
      the performance of the segments based upon income from operations before general
      and administrative expenses. The accounting policies of the segments are the
      same as those described in the summary of significant accounting policies (Note
      1) in the Company’s Annual Report on Form 10-K for the year ended June 30, 2007.





Certain
      items are maintained at the corporate headquarters (corporate) and are not
      allocated to the segments. They primarily include general and administrative
      expenses. General and administrative expenses at the Company’s Sonora, Labcaire,
      UKHIFU Limited and Misonix, Ltd. subsidiaries are included in corporate and
      unallocated amounts in the tables below. The Company does not allocate assets
      by
      segment. Summarized financial information for each of the segments is as
      follows:




For
      the
      six months ended December 31, 2007





**Medical
                Device**
              **Products**
            
            **Laboratory
                and******
              **Scientific**
              **Products**
            
            **Corporate
                and******
              **Unallocated**
            
            **Total**Net
                sales
            
            $
            11,336,320
            
            $
            10,795,970
            
            $
            -
            
            $
            22,132,290Cost
                of goods sold
            
            
            5,663,322
            
            
            6,638,599
            
            
            -
            
            
            12,301,921Gross
                profit
            
            
            5,672,998
            
            
            4,157,371
            
            
            -
            
            
            9,830,369Selling
                expenses
            
            
            2,295,628
            
            
            1,291,557
            
            
            -
            
            
            3,587,185Research
                and development
            
            
            1,119,065
            
            
            526,487
            
            
            -
            
            
            1,645,552General
                and administrative
            
            
            -
            
            
            -
            
            
            5,126,076
            
            
            5,126,076Total
                operating expenses
            
            
            3,414,693
            
            
            1,818,044
            
            
            5,126,076
            
            
            10,358,813Income
                (loss) from operations
            
            $
            2,258,305
            
            $
            2,339,327
            
            $
            (5,126,076
            )
            $
            (528,444
            )








14




**MISONIX,
                INC and Subsidiaries****Notes
                to Consolidated Financial Statements**(Information
                with respect to interim periods is
                unaudited)




For
      the
      six months ended December 31, 2006





**Medical
                Device**
              **Products**
            
            **Laboratory
                and******
              **Scientific**
              **Products**
            
            **Corporate
                and******
              **Unallocated**
            
            **Total**Net
                sales
            
            $
            11,051,464
            
            $
            9,230,500
            
            $
            -
            
            $
            20,281,964Cost
                of goods sold
            
            
            6,180,576
            
            
            5,382,767
            
            
            -
            
            
            11,563,343Gross
                profit
            
            
            4,870,888
            
            
            3,847,733
            
            
            -
            
            
            8,718,621Selling
                expenses
            
            
            2,343,822
            
            
            1,177,534
            
            
            -
            
            
            3,521,356Research
                and development
            
            
            1,049,026
            
            
            599,359
            
            
            -
            
            
            1,648,385General
                and administrative
            
            
            -
            
            
            -
            
            
            4,707,431
            
            
            4,707,431Total
                operating expenses
            
            
            3,392,848
            
            
            1,776,893
            
            
            4,707,431
            
            
            9,877,172Income
                (loss) from operations
            
            $
            1,478,040
            
            $
            2,070,840
            
            $
            (4,707,431
            )
            $
            (1,158,551
            )







For
      the
      three months ended December 31, 2007





**Medical
                Device**
              **Products**
            
            **Laboratory
                and******
              **Scientific**
              **Products**
            
            **Corporate
                and******
              **Unallocated**
            
            **Total**Net
                sales
            
            $
            6,038,203
            
            $
            5,561,850
            
            $
            -
            
            $
            11,600,053Cost
                of goods sold
            
            
            2,956,296
            
            
            3,479,182
            
            
            -
            
            
            6,435,478Gross
                profit
            
            
            3,081,907
            
            
            2,082,668
            
            
            -
            
            
            5,164,575Selling
                expenses
            
            
            1,215,457
            
            
            683,218
            
            
            -
            
            
            1,898,675Research
                and development
            
            
            650,220
            
            
            285,095
            
            
            -
            
            
            935,315General
                and administrative
            
            
            -
            
            
            -
            
            
            2,620,316
            
            
            2,620,316Total
                operating expenses
            
            
            1,865,677
            
            
            968,313
            
            
            2,620,316
            
            
            5,454,306Income
                (loss) from operations
            
            $
            1,216,230
            
            $
            1,114,355
            
            $
            (2,620,316
            )
            $
            (289,731
            )







For
      the
      three months ended December 31, 2006:





**Medical
                Device**
              **Products**
            
            **Laboratory
                and******
              **Scientific**
              **Products**
            
            **Corporate
                and******
              **Unallocated**
            
            **Total**Net
                sales
            
            $
            6,221,009
            
            $
            4,418,077
            
            $
            -
            
            $
            10,639,086Cost
                of goods sold
            
            
            3,204,488
            
            
            2,647,843
            
            
            -
            
            
            5,852,331Gross
                profit
            
            
            3,016,521
            
            
            1,770,234
            
            
            -
            
            
            4,786,755Selling
                expenses
            
            
            1,272,400
            
            
            651,717
            
            
            -
            
            
            1,924,117Research
                and development
            
            
            525,342
            
            
            302,826
            
            
            -
            
            
            828,168General
                and administrative
            
            
            -
            
            
            -
            
            
            2,303,148
            
            
            2,303,148Total
                operating expenses
            
            
            1,797,742
            
            
            954,543
            
            
            2,303,148
            
            
            5,055,433Income
                (loss) from operations
            
            $
            1,218,779
            
            $
            815,691
            
            $
            (2,303,148
            )
            $
            (268,678
            )





15




**MISONIX,
                INC and Subsidiaries****Notes
                to Consolidated Financial Statements**(Information
                with respect to interim periods is
                unaudited)




The
      Company’s revenues are generated from various geographic regions. The following
      is an analysis of net sales by geographic region:




Six
                Months
            
            Three
                Months**2007**
            
            2006
            
            **2007**
            
            2006United
                States
            
            **$**
            **11,894,476**
            
            $
            11,924,858
            
            **$**
            **6,250,743**
            
            $
            5,915,357United
                Kingdom
            
            
            **7,037,648**
            
            
            5,440,671
            
            
            **3,589,682**
            
            
            2,719,336Europe
            
            
            **1,190,475**
            
            
            1,692,694
            
            
            **798,875**
            
            
            1,318,741Asia
            
            
            **1,143,351**
            
            
            753,335
            
            
            **460,741**
            
            
            445,825Canada
                and Mexico
            
            
            **270,886**
            
            
            182,133
            
            
            **162,743**
            
            
            116,570Middle
                East
            
            
            **136,911**
            
            
            56,237
            
            
            **108,990**
            
            
            10,669Other
            
            
            **458,543**
            
            
            232,036
            
            
            **228,279**
            
            
            112,588**$**
            **22,132,290**
            
            $
            20,281,964
            
            **$**
            **11,600,053**
            
            $
            10,639,086







16


**Item
        2. Management’s Discussion and Analysis of Financial Condition and Results of
        Operations.**
 
 Six
        months ended December 31, 2007 and 2006
 
 **Net
        sales** **:** Net
        sales increased $1,850,326 to $22,132,290 for the six months ended December
        31,
        2007 from $20,281,964 for the six months ended December 31, 2006. This
        difference in net sales is principally due to an increase in laboratory and
        scientific products sales of $1,565,470 to $10,795,970 for the six months
        ended
        December 31, 2007 from $9,230,500 for the six months ended December 31, 2006.
        This difference in net sales is also due to an increase in sales of medical
        device products of $284,856 to $11,336,320 for the six months ended December
        31,
        2007 from $11,051,464 for the six months ended December 31, 2006. The increase
        in sales of medical device products is due to an increase in sales of
        therapeutic medical device products of $7,002 plus an increase of $277,854
        in
        sales of diagnostic medical device products. The increase in sales of
        therapeutic medical device products was primarily attributable to the increased
        sales of the Company’s ultrasonic neuroaspirator of $883,000, an increase in
        sales of the Company’s ultrasonic assisted liposuction product of $494,000, an
        increase in sales of the Company’s wound debridement product of $82,000 and an
        increase in sales of other therapeutic medical device products of $204,000,
        partially offset by a decrease in AutoSonix sales to United States Surgical
        (“USS”), a subsidiary of Covidien Ltd., of $597,000 and a decrease in Sonablate
        500® sales of $1,059,000. Approximately 75% of the decrease in sales to USS
        occurred in the three months ended September 30, 2007. The increase in sales
        of
        diagnostic medical device products was attributable to several new customers,
        an
        increase in customer demand for several new products and increased repair
        capability. The increase in sales of laboratory and scientific products is
        due
        to a $1,513,897 increase in Labcaire Systems, Ltd. (“Labcaire”) products sales,
        an increase of $298,658 in ductless fume enclosure product sales and an increase
        of $269,568 in ultrasonic product sales, partially offset by a $516,651 decrease
        in sales of wet scrubber products. The Company has limited the opportunities
        it
        pursues for wet scrubber products. The increase in Labcaire sales of $1,513,897
        is due to shipments of its new ISIS endoscope cleaning system and the
        strengthening of the English Pound versus the U.S. dollar which accounted
        for
        approximately $460,000 of the sales increase. The increase in ductless fume
        enclosure product sales and ultrasonic product sales is due to an increase
        in
        customer demand for several products and not attributable to a single customer,
        distributor or any other specific factor.
 
 Export
        sales from the United States are remitted in U.S. dollars and export sales
        for
        Labcaire are remitted in English Pounds. UKHIFU Limited ("UKHIFU") sales
        are remitted in English Pounds and Misonix, Ltd. sales to date have been
        remitted in English pounds and Euros. To the extent that the Company’s revenues
        are generated in English Pounds, its operating results were translated for
        reporting purposes into U.S. dollars using weighted average rates of 2.03
        and
        1.90 for the six months ended December 31, 2007 and 2006, respectively. A
        strengthening of the English Pound and Euro, in relation to the U.S. dollar,
        will have the effect of increasing recorded revenues and profits, while
        a weakening of the English Pound and Euro will have the opposite effect.
        Since the Company’s operations in England generally set prices and bids for
        contracts in English Pounds, a strengthening of the English Pound, while
        increasing the value of its UK assets, might place the Company at a pricing
        disadvantage in bidding for work from manufacturers based overseas. The Company
        collects its receivables predominately in the currency of the country the
        subsidiary resides in. The Company has not engaged in foreign currency hedging
        transactions, which include forward exchange agreements. See Item 3.
“Quantitative and Qualitative Disclosures About Market Risk.”
 
 **Gross
        profit:** Gross
        profit increased to 44.4% for the six months ended December 31, 2007 from
        43.0%
        for the six months ended December 31, 2006. Gross profit for medical device
        products increased to 50.0% for the six months ended December 31, 2007 from
        44.1% for the six months ended December 31, 2006. Gross profit for laboratory
        and scientific products decreased to 38.5% for the six months ended December
        31,
        2007 from 41.7% for the six months ended December 31, 2006. Gross profit
        for
        therapeutic medical device products was favorably impacted by a favorable
        product mix due to increased sales of ultrasonic neuroaspirator products
        in
        foreign markets which have higher selling prices, increased sales of the
        ultrasonic neuroaspirator products in the United States and increased sales
        of
        ultrasonic assisted liposuction products which have higher gross profits
        than
        the AutoSonix products. The December 2007 period also benefited from a favorable
        mix of diagnostic medical device products sales. The decrease in gross profit
        in
        the December 2007 period for laboratory and scientific products is due to
        lower
        margins at Labcaire due to higher costs related to the first ISIS units shipped.
 
 17
 **Selling
        expenses:** Selling
        expenses increased $65,829 to $3,587,185 for the six months ended December
        31,
        2007 from $3,521,356 for the six months ended December 31, 2006. Laboratory
        and
        scientific products selling expenses increased $114,023, predominantly due
        to
        increased selling and services expenses at Labcaire related to the ISIS units
        and the impact of the stronger English Pound of approximately $56,000. Selling
        expenses for medical device products decreased $48,194, substantially due
        to
        decreased expenses related to diagnostic products, which were partially offset
        by increased expense related to therapeutic medical device products.
 
 **General
        and administrative expenses** :
        General
        and administrative expenses increased $418,645 from $4,707,431 in the six
        months
        ended December 31, 2006 to $5,126,076 in the six months ended December 31,
        2007.
        General and administrative expenses increased for the six months ended December
        31, 2007 principally due to increased depreciation expense of $108,732,
        increased staffing expense of $171,379, increased provision for bad debts
        of
        $90,500, increased recruiting fees of $81,466, increased bank fees of $67,735,
        higher professional fees of $25,635 and increased expenses at Labcaire of
        $151,737, which includes the impact of the stronger English Pound of
        approximately $76,000, partially offset by decreased insurance expense of
        $111,404, decreased administrative costs of $101,246 related to the High
        Intensity Focused Ultrasound ("HIFU") business in Europe and a decrease of
        $65,889 in other administrative expenses. The increase in bad debt expense
        was
        due to an increase in the allowance for bad debts for a customer balance
        which
        is substantially past due.
  **Research
        and development expenses** **:**  Research
        and development expenses decreased $2,883 from $1,648,385 for the six months
        ended December 31, 2006 to $1,645,552 for the six months ended December 31,
        2007. Research and development expenses for medical device products increased
        $70,039. Therapeutic medical device products research and development expenses
        increased approximately $11,000, primarily due to milestone charges of $210,000
        from Focus Surgery, Inc. (“Focus”) related to the High Intensity Focused
        Ultrasound kidney cancer research project, which was partially offset by
        reduced
        salary and consulting expense of approximately $124,000, reduced research
        and
        development expenses for the Company’s Hearing Innovations products of $24,000
        and approximately $51,000 of decreased other expenses. Research and development
        expenses for diagnostic medical device products increased $59,179 related
        to
        developing new products and services which were introduced during the current
        fiscal year. Laboratory and scientific products research and development
        expenses decreased approximately $72,872 due to reduced efforts on the Labcaire
        ISIS product which was introduced and launched in the fourth quarter of fiscal
        2007 and completing the S-4000 digital Sonicator product during the first
        quarter of fiscal 2008.
 
 **Other
        income:** Other
        income for the six months ended December 31, 2007 was $64,780 as compared
        to
        other income of $275,075 for the six months ended December 31, 2006. The
        decrease of $210,295 was primarily due to decreased royalty income and license
        fees of $125,757 from USS, increased royalty expense of $125,900 at Acoustic
        Marketing Research, Inc. d/b/a Sonora Medical Systems (“Sonora”) related to
        licensed probe repair technology and sale of Acoustic Power tanks, increased
        royalty expense related to the Company’s Lysonix product of $26,217, increased
        interest expense of $24,687 related to the purchase of minority shares of
        Sonora, decreased interest income of $17,528 and $40,206 increased expenses
        related to currency and value added tax expense. The December 2007 period
        includes $150,000 in income from the realization of a previously impaired
        Secured Cumulative Convertible Debenture from Focus.
 
 **Income
        taxes:** The
        effective tax rate was 29.5% for the six months ended December 31, 2007,
        as
        compared to an effective tax rate of 42.9% for the six months ended December
        31,
        2006. The effective tax rate for the six months ended December 31, 2006 was
        favorably impacted by an additional $98,000 of Research and Experimentation
        Credits provided by the enactment of the Tax Relief and Healthcare Act of
        2006
        (HR6111) which retroactively extended the tax credit for Research and
        Experimentation expenditures. The December 2007 effective income tax rate
        differs from the statutory rate due to the impact of permanent differences
        related to SFAS 123R stock-based compensation and non-deductible entertainment
        expenses on taxable income. In addition, the $150,000 income from the
        realization of a previously written off debt from Focus was not tax effected
        because the Company did not record an income tax benefit when the debt was
        originally written off.
 
 18
 
 Three
        months ended December 31, 2007 and 2006
 
 **Net
        sales** **:** Net
        sales increased $960,967 to $11,600,053 for the three months ended December
        31,
        2007 from $10,639,086 for the three months ended December 31, 2006. The increase
        in net sales is due to an increase in laboratory and scientific products
        sales
        of $1,143,773 to $5,561,850 for the three months ended December 31, 2007
        from
        $4,418,077 for the three months ended December 31, 2006. The increase in
        laboratory and scientific products was partially offset by a decrease in
        sales
        of medical device products of $182,806 to $6,038,203 for the three months
        ended
        December 31, 2007 from $6,221,009 for the three months ended December 31,
        2006.
        The decrease in sales of medical device products is due to a decrease in
        sales
        of therapeutic medical device products of $149,970 plus a decrease of $32,836
        in
        sales of diagnostic medical device products. The decrease in sales of
        therapeutic medical device products was primarily attributable to a decrease
        in
        revenue from the Company’s Sonablate® 500 product of $1,059,000 and a decrease
        in AutoSonix sales to USS of $141,000 which was partially offset by an increase
        in sales of the Company’s neuroaspirator product of $563,000 and an increase in
        sales of the ultrasonic assisted liposuction product of $335,000 and an increase
        in sales of other therapeutic medical device products of $152,000. The decrease
        in sales of diagnostic medical device products was not attributable to a
        single
        customer, distributor or any other specific factor. The increase in sales
        of
        laboratory and scientific products is due to a $773,000 increase in Labcaire
        products sales, an increase of $183,000 in ultrasonic product sales and an
        increase of $144,000 in ductless fume enclosure product sales. The increase
        in
        Labcaire sales of $773,000 is due to shipments of its new ISIS endoscope
        cleaning system and the strengthening of the English Pound versus the U.S.
        dollar which accounted for approximately $203,000 of the sales increase.
        The
        increase in ductless fume enclosure product sales and ultrasonic product
        sales
        is due to an increase in customer demand for several products and not
        attributable to a single customer, distributor or any other specific factor.
 
 Export
        sales from the United States are remitted in U.S. dollars and export sales
        for
        Labcaire are remitted in English Pounds. UKHIFU sales are remitted in English
        Pounds and Misonix, Ltd. sales to date have been remitted in Euros. To the
        extent that the Company’s revenues are generated in English Pounds, its
        operating results were translated for reporting purposes into U.S. dollars
        using
        weighted average rates of 2.04 and 1.92 for the three months ended December
        31,
        2007 and 2006, respectively. A strengthening of the English Pound and Euro,
        in
        relation to the U.S. dollar, will have the effect of increasing recorded
        revenues and profits, while a weakening of the English Pound and Euro will
        have
        the opposite effect. Since the Company’s operations in England generally set
        prices and bids for contracts in English Pounds, a strengthening of the English
        Pound, while increasing the value of its UK assets, might place the Company
        at a
        pricing disadvantage in bidding for work from manufacturers based overseas.
        The
        Company collects its receivables predominately in the currency of the country
        the subsidiary resides in. The Company has not engaged in foreign currency
        hedging transactions, which include forward exchange agreements. See Item
        3.
“Quantitative and Qualitative Disclosures About Market Risk.”
 
 **Gross
        profit:** Gross
        profit decreased to 44.5% for the three months ended December 31, 2007 from
        45.0% for the three months ended December 31, 2006. Gross profit for medical
        device products increased to 51.0% for the three months ended December 31,
        2007
        from 48.5% for the three months ended December 31, 2006. Gross profit for
        laboratory and scientific products decreased to 37.4% for the three months
        ended
        December 31, 2007 from 40.1% for the three months ended December 31, 2006.
        Gross
        profit for medical device products was favorably impacted by increased sales
        of
        neuroaspirator and ultrasonic assisted liposuction products and a decrease
        in
        AutoSonix sales. The neuroaspirator and ultrasonic assisted liposuction products
        have higher gross profits than the AutoSonix products. The increased margin
        from
        increased sales of neuroaspirator and ultrasonic assisted liposuction products
        was partially offset by decreased sales of the Sonablate 500®. The December 2007
        quarter also benefited from a favorable mix of diagnostic medical device
        products sales. The decrease in gross profit in the December 2007 quarter
        for
        laboratory and scientific products is due to lower margins at Labcaire due
        to
        higher costs related to the first ISIS units shipped.
 
 19
 **Selling
        expenses:** Selling
        expenses decreased $25,442 to $1,898,675 for the three months ended December
        31,
        2007 from $1,924,117 for the three months ended December 31, 2006. Laboratory
        and scientific products selling expenses increased $31,501, predominantly
        due to
        an increase in commissions related to increased sales commissions at Labcaire
        and the impact of the stronger English Pound of $27,000 which was partially
        offset by a $30,000 decrease in expenses related to demo equipment for
        ultrasonic and fume products. Medical selling expenses decreased $57,000,
        principally due to decreased sales commissions of $26,000 and a reduction
        in demo equipment expense of $51,000, partially offset by increased expenses
        in
        Europe related to the HIFU product.
 
 **General
        and administrative expenses** :
        General
        and administrative expenses increased $317,168 from $2,303,148 in the three
        months ended December 31, 2006 to $2,620,316 in the three months ended December
        31, 2007. General and administrative expenses increased for the three months
        ended December 31, 2007 due to increased bad debt expense of $90,000 which
        was
        recorded to increase the allowance for bad debts for a customer balance which
        is
        substantially past due. In addition, staffing expense increased
        $136, 149,
        depreciation increased $54,055, recruiting fees increased $45,563 and bank
        fees
        increased $40,295. General and administrative expenses at Labcaire increased
        $100,479 of which approximately $37,000 is due to the strengthening of the
        British pound against the U.S. dollar. These increases were partially offset
        by
        decreased professional fees of $74,221, decreased insurance expense of $54,000
        and decreases in other administrative expenses of $21,152.
 
 **Research
        and development expenses** **:**  Research
        and development expenses increased $107,147 from $828,168 for the three months
        ended December 31, 2006 to $935,315 for the three months ended December 31,
        2007. Laboratory and scientific products research and development expenses
        decreased approximately $17,700 due to reduced efforts on the Labcaire ISIS
        product which was introduced and launched in the fourth quarter of fiscal
        2007.
        Research and development expenses for medical device products increased
        $124,878. Therapeutic medical device products research and development expenses
        increased approximately $108,000 primarily due to milestone charges of $210,000
        from Focus related to the HIFU kidney cancer research project. This
        increase was partially offset by reduced staff and consulting expense of
        $80,000
        related to completing efforts to upgrade the first product selected for the
        new
        digital platform and other reduced research expenses of $22,000. Research
        and
        development expenses for diagnostic medical device products increased
        approximately $17,000 related to developing new products and services which
        were
        introduced during the current fiscal year.
 
 **Other
        income:** Other
        income for the three months ended December 31, 2007 was $85,941 as compared
        to
        other income of $141,417 for the three months ended December 31, 2006. The
        decrease of $55,476 was primarily due to decreased royalty income and license
        fees from USS of $125,000, increased royalty expense of $60,000 at Sonora
        related to licensed probe repair technology and sales of Acoustic Power tanks
        and $12,000 related to sales of the Company’s ultrasonic assisted liposuction
        products, reduced interest income of $13,000 and increased other expenses
        of
        $36,000. Interest expense decreased $41,000 principally due to decreased
        borrowing by Labcaire which was partially offset by interest related to the
        purchase of shares of Sonora from a shareholder. Other income includes $150,000
        income from the realization of a previously impaired 5.1% Secured Cumulative
        Convertible Debenture from Focus.
 
 **Income
        taxes:** The
        effective tax rate was 46.2% for the three months ended December 31, 2007,
        as
        compared to an effective tax rate of 119.4% for the three months ended December
        31, 2006. The December 2007 effective income tax rate differs from the statutory
        rate due to the impact of permanent differences related to SFAS 123R stock-based
        compensation and non-deductible entertainment expenses on taxable income.
        In
        addition, the $150,000 income from the previously written off debt from Focus
        was not tax effected because the Company did not record an income tax benefit
        when the debt was originally written off. The effective tax rate excluding
        the
        impact of the realization of the Focus debt was 28.7%. The tax rate in the
        December 31, 2006 quarter was favorably impacted by an additional $98,000
        of
        Research and Experimentation Credits provided for with the December 20, 2006
        Enactment of the Tax Relief and Healthcare Act of 2006 (HR6111), which
        retroactively extended the tax credit for Research and Experimentation
        Expenditures through December 31, 2007.
 
 **Critical
        Accounting Policies:**
 
 The
        Company prepares its consolidated financial statements in accordance with
        accounting principles generally accepted in the United States of America.
        Certain of these accounting policies require the Company to make estimates
        and
        judgments that affect the reported amounts of assets, liabilities, revenues
        and
        expenses, and the related disclosure of contingent assets and liabilities,
        revenues and expenses. On an ongoing basis, the Company bases its estimates
        on
        historical data and experience, when available, and on various other assumptions
        that are believed to be reasonable under the circumstances, the combined
        results
        of which form the basis for making judgments about the carrying values of
        assets
        and liabilities that are not readily apparent from other
        sources.





20


Actual
      results may differ from these estimates. There have been no material changes
      in
      the Company’s critical accounting policies and estimates from those discussed in
      Item 7 of the Company’s Annual Report on Form 10-K for the year ended June 30,
      2007.





**Recent
      Accounting Standards**





In
      March
      2006, the Financial Accounting Standards Board (“FASB”) issued Statement of
      Financial Accounting Standards ("SFAS") No. 156, “Accounting for Servicing of
      Financial Assets” (“SFAS 156”), an amendment of SFAS 140, “Accounting for
      Transfers and Servicing of Financial Assets and Extinguishment of Liabilities”.
      SFAS 156 requires all separately recognized servicing assets and servicing
      liabilities to be initially measured at fair value, if practicable, and permits
      an entity to subsequently measure those servicing assets and servicing
      liabilities at fair value. SFAS 156 is effective for fiscal years beginning
      after September 15, 2006. The Company adopted SFAS 156 effective July 1, 2007
      and the adoption of SFAS 156 did not have a material effect on the Company’s
      consolidated financial position or results of operations.





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS
      157”). SFAS 157 provides a new single authoritative definition of fair value and
      provides enhanced guidance for measuring the fair value of assets and
      liabilities and requires additional disclosures related to the extent to which
      companies measure assets and liabilities at fair value, the information used
      to
      measure fair value and the effect of fair value measurements on earnings. SFAS
      157 is effective as of the beginning of an entity’s first fiscal year beginning
      after November 15, 2007. The Company is currently evaluating the impact that
      the
      adoption of SFAS 157 may have on the Company’s consolidated financial position
      and results of operations.





In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities” (“SFAS 159”), which provides
      companies with an option to report selected financial assets and liabilities
      at
      fair value in an attempt to reduce both complexity in accounting for financial
      instruments and the volatility in earnings caused by measuring related assets
      and liabilities differently. This Statement is effective as of the beginning
      of
      an entity’s first fiscal year beginning after November 15, 2007. The Company is
      currently evaluating the impact that the adoption of SFAS 159 may have on the
      Company’s consolidated financial position and results of operation.





In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements — an amendment of ARB No. 51” (“SFAS 160”).
      SFAS 160 amends ARB No. 51 to establish accounting and reporting standards
      for
      the noncontrolling interest in a subsidiary and for the deconsolidation of
      a
      subsidiary. It clarifies that a noncontrolling interest in a subsidiary, which
      is sometimes referred to as a minority interest, is an ownership interest in
      the
      consolidated entity that should be reported as equity in the consolidated
      financial statements. Among other requirements, this Statement requires
      consolidated net income to be reported at amounts that include the amounts
      attributable to both the parent and noncontrolling interest. It also requires
      disclosure, on the face of the consolidated statement of operations, of the
      amounts of consolidated net income (loss) attributable to the parent and to
      the
      noncontrolling interest. SFAS 160 is effective for fiscal years, and interim
      periods within those fiscal years, beginning on or after December 15, 2008.
      Earlier adoption is prohibited. We have not yet evaluated the impact of SFAS
      160
      on our consolidated financial position and results of operations.






**Forward
      Looking Statements**





This
      Report contains certain forward looking statements within the meaning of Section
      27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
      Exchange Act of 1934, as amended (the “Exchange Act”), which are intended to be
      covered by the safe harbors created thereby. Although the Company believes
      that
      the assumptions underlying the forward looking statements contained herein
      are
      reasonable, any of the assumptions could be inaccurate, and therefore, there
      can
      be no assurance that the forward looking statements contained in this Report
      will prove to be accurate. Factors that could cause actual results to differ
      from the results specifically discussed in the forward looking statements
      include, but are not limited to, the absence of anticipated contracts, higher
      than historical costs incurred in performance of contracts or in conducting
      other activities, product mix in sales, results of joint ventures and
      investments in related entities, future economic, competitive and market
      conditions, and the outcome of legal proceedings as well as management business
      decisions.





21





**Liquidity
      and Capital Resources**





Working
      capital at December 31, 2007 and June 30, 2007 was $10,240,238 and $11,165,090,
      respectively. For the six months ended December 31, 2007, cash provided by
      operations totaled $664,573. A major source of cash from operations was the
      receipt of $629,000 held by the Bank of America (“BOA”) to secure a standby
      letter of credit after the Company terminated its credit agreement with BOA.
      This amount was included in prepaid expenses and other current assets at June
      30, 2007. In addition, prepaid expenses decreased approximately $500,000 during
      the six months ended December 31, 2007, principally related to the amortization
      of insurance premiums in the United States. The major use of cash from
      operations was to pay down accounts payable and accrued expenses of
      approximately $615,000 during the six months ended December 31, 2007. For the
      six months ended December 31, 2007, cash used in investing activities totaled
      $888,239, primarily consisting of the purchase of property, plant and equipment
      during the regular course of business and the purchase of shares of the common
      stock of Sonora increasing the Company’s ownership to 93.75%. For the six months
      ended December 31, 2007, cash used in financing activities was $1,579,785,
      primarily consisting of principal payments on capital lease obligations and
      short-term borrowings of approximately $11,098,000, partially offset by proceeds
      from short-term borrowings of approximately $9,518,000.






**Revolving
      Credit Facilities**





Labcaire
      has a debt purchase agreement with Lloyds TSB Commercial Finance. The amount
      of
      this facility bears interest at the bank’s base rate (5.5% at December 31, 2007)
      plus 2% and fluctuates based upon the outstanding United Kingdom and European
      receivables. The agreement expires September 28, 2008. The agreement covers
      all
      United Kingdom and European sales. At December 31, 2007, the balance outstanding
      under this credit facility was $915,000 and Labcaire was in compliance with
      all
      financial covenants.





On
      December 29, 2006, the Company and its subsidiaries, Sonora and Hearing
      Innovations, Inc. ("Hearing Innovations"), the Company, Sonora and Hearing
      Innovations (collectively referred to as the “Borrowers”) and Wells Fargo Bank
      entered into a (i) Credit and Security Agreement and a (ii) Credit and Security
      Agreement Export-Import Subfacility (collectively referred to as the “Credit
      Agreements”). The aggregate credit limit under the Credit Agreements is
      $8,000,000 consisting of a revolving facility in the amount of up to $8,000,000.
      Up to $1,000,000 of the revolving facility is available under the Export-Import
      Agreement as a subfacility for Export-Import working capital financing. All
      credit facilities under the Credit Agreements mature on December 29, 2009.
      Payment of amounts outstanding under the Credit Agreements may be accelerated
      upon the occurrence of an Event of Default (as defined in the Credit
      Agreements). All loans and advances under the Credit Agreements are secured
      by a
      first priority security interest in all of the Borrowers’ accounts receivable,
      letter-of-credit rights, and all other business assets. The Borrowers have
      the
      right to terminate or reduce the credit facility prior to December 29, 2009
      by
      paying a fee based on the aggregate credit limit (or reduction, as the case
      may
      be) as follows: (i) during year one of the Credit Agreements, 3%; (ii) during
      year two of the Credit Agreements, 2%; and (iii) during year three of the Credit
      Agreements, 1%.




The
      Credit Agreements contain financial covenants requiring that the Borrowers
      not
      incur or contract to incur Capital Expenditures (as defined in the Credit
      Agreements) of more than $1,000,000 in the aggregate in any fiscal year or
      more
      than $1,000,000 in any one transaction. At December 31, 2007, the Borrowers
      were
      in compliance with all financial covenants under the Credit
      Agreements.





22


The
      available amount under the Credit Agreements is the lesser of $8,000,000 or
      the
      amount calculated under the Borrowing Base (as defined in the Credit
      Agreements). The Borrowers must maintain a minimum outstanding amount of
      $1,250,000 under the Credit Agreements at all times and pay a fee equal to
      the
      interest rate set forth on any such shortfall. Interest on amounts borrowed
      under the Credit Agreements is payable at Wells Fargo’s prime rate of interest
      plus 1% per annum floating, payable monthly in arrears. The default rate of
      interest is 3% higher than the rate otherwise payable. A fee of 1⁄2 % per annum on
      the Unused Amount (as defined in the Credit Agreements) is payable monthly
      in
      arrears. At December 31, 2007, the balance outstanding under the Credit
      Agreement was $1,984,000, and an additional $1,692,000 was available under
      this
      line of credit.








**Off-Balance
      Sheet Arrangements**





The
      Company has no off-balance sheet arrangements that have or are reasonably likely
      to have a current or future effect on the Company’s financial condition, changes
      in financial condition, revenues or expenses, results of operations, liquidity,
      capital expenditures or capital resources that is material to the
      Company.








**Other**





In
      the
      opinion of management, inflation has not had a material effect on the operations
      of the Company.








**Item
      3. Quantitative and Qualitative Disclosures About Market
      Risk.**





*Market
      Risk:*


The
      principal market risks (i.e., the risk of loss arising from adverse changes
      in
      market rates and prices) to which the Company is exposed are interest rates
      on
      short-term investments and foreign exchange rates, which generate translation
      gains and losses due to the English Pound to U.S. Dollar conversion of Labcaire,
      Misonix, Ltd. and UKHIFU.





*Foreign
      Exchange Rates:*


Approximately
      33.7% and 32.9% of the Company’s revenues in the six-month and three-month
      period ended December 31, 2007, respectively, were received in English Pounds
      currency. To the extent that the Company’s revenues are generated in English
      Pounds, its operating results were translated for reporting purposes into U.S.
      Dollars using rates of 2.03 and 1.90 for the six months ended December 31,
      2007
      and 2006, respectively, and 2.04 and 1.92 for the three months ended December
      31, 2007 and 2006, respectively. A strengthening of the English Pound, in
      relation to the U.S. Dollar, will have the effect of increasing its reported
      revenues and profits, while a weakening will have the opposite effect. Since
      the
      Company’s operations in England generally set prices and bids for contracts in
      English Pounds, a strengthening of the English Pound, while increasing the
      value
      of its UK assets, might place the Company at a pricing disadvantage in bidding
      for work from manufacturers based overseas. The Company collects its receivables
      predominately in the currency of the country the subsidiary resides in. Misonix,
      Ltd. invoices certain customers in Euros and as a result there is an exchange
      rate exposure between the English Pound and the Euro. The Company has not
      engaged in foreign currency hedging transactions, which include forward exchange
      agreements.





*Interest
      Rate Risk:*


The
      Company earns interest on cash balances and pays interest on debt incurred.
      In
      light of the Company’s existing cash, results of operations, terms of its debt
      obligations and projected borrowing requirements, the Company does not believe
      a
      10% change in interest rates would have a significant impact on its consolidated
      financial position.





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**Item
      4. Controls and Procedures.**





Our
      disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
      under the Exchange Act) are designed to ensure that information required to
      be
      disclosed in the reports that we file or submit under the Exchange Act is
      recorded, processed, summarized and reported within the time periods specified
      in the rules and forms of the Securities and Exchange Commission. The Company
      carried out an evaluation, under the supervision and with the participation
      of
      the Company’s management, including the Company’s Chief Executive Officer and
      Chief Financial Officer, of the effectiveness of the design and operation
      of the Company’s disclosure controls and procedures as of December 31, 2007 and,
      based on their evaluation, the Chief Executive Officer and Chief Financial
      Officer concluded that the Company’s disclosure controls and procedures are
      effective.





There
      has
      been no change in the Company’s internal control over financial reporting (as
      defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred
      during the three months ended December 31, 2007 that has materially affected,
      or
      is reasonable likely to materially affect, the Company’s internal control over
      financial reporting.










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Part
      II-
      OTHER INFORMATION





Item
      1A.
      Risk Factors





Risks
      and
      uncertainties that, if they were to occur, could materially adversely affect
      our
      business or that could cause our actual results to differ materially from the
      results contemplated by the forward-looking statements contained in this Report
      and other public statements were set forth in the “Item 1A. Risk Factors”
section of our Annual Report on Form 10-K for the year ended June 30, 2007.
      There have been no material changes from the risk factors disclosed in that
      Form
      10-K.





Item
      4.
      Submission of Matters to a Vote of Security Holders.





At
      the
      Company’s Annual Meeting of Shareholders, held on December 11, 2007, Messrs.
      Howard Alliger, John W. Gildea, Michael A. McManus, Jr., Dr. Charles Miner
      III,
      T. Guy Minetti and Thomas F. O’Neill were elected as Directors for a one-year
      term. The votes were as follows: Mr. Alliger - votes for 6,226,825; votes
      withheld 97,623. Mr. Gildea - votes for 6,213,775; votes withheld 110,673.
      Mr.
      McManus - votes for 5,480,163; votes withheld 844,285. Dr. Miner - votes for
      6,230,125; votes withheld 94,323. Mr. Minetti - votes for 6,228,325; votes
      withheld 96,123. Mr. O’Neill - votes for 6,227,911; votes withheld
      96,537.








Item
      6.  Exhibits





Exhibit
      31.1- Rule 13a-14(a)/15d-14(a) Certification


Exhibit
      31.2- Rule 13a-14(a)/15d-14(a) Certification


Exhibit
      32.1- Section 1350 Certification of Chief Executive Officer


Exhibit
      32.2- Section 1350 Certification of Chief Financial Officer




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**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.





Date:  February
      11, 2008




MISONIX,
                INC.
              
              (Registrant)By:
            /s/
              Michael A. McManus, Jr.Michael
              A. McManus, Jr.President
              and
              Chief Executive Officer




By:
            /s/
              Richard ZarembaRichard
              ZarembaSenior
                Vice President, Chief Financial Officer,
              Treasurer
                and Secretary




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